Patrick Deneen is not willing to let David Brooks (and the rest of the conservative movement) off the hook for acquiescing in creating a culture of spendthrifts. Excerpt:
Brooks is absolutely right that traditional habits of thrift should be inculcated. However, he - and many other so-called conservatives - should be cognizant and more than slightly ashamed at his complicity in the three-decade old destruction of those values of thrift that were a central part of modern "conservatism." (Not that we should think for a moment that our "liberals" haven't been as complicit - their valorization of "lifestyle" freedom has contributed just as mightily as our "conservatives" to our contemporary hedonism and neglect of the consequences our actions upon future generations. I'm tougher on conservatives because you'd think they'd know better, since their political label consists of the word "conserve"). We are now in the midst of a great redefinition of what it means to conserve, and the people who seem still not to have gotten the message are most of our "conservatives" who are defending nothing other than the legacy of Woodrow Wilson (including a good deal of his international dream of world democracy) - the utopian vision of Progress that requires no costs and has no consequences.
Add to Del.icio.us
Add to Technorati
Add to Digg
Add to Newsvine
Add to Facebook
Add to StumbleUpon
Subscribe
A consumption tax need not be regressive. Although savings rates tend to increase with income, all this means is that taxing all consumption _at the same rate_ - e.g., as with the FairTax - would be regressive. So use a graduated rate schedule. AFAIK, this couldn't be done with a retail sales tax or VAT (counterexamples welcome); but it can be done through our current income-tax structure: E.g., Just take a tax-deferred account like a (traditional) IRA or 401k, and remove both the penalties & limitations on early withdrawals as well as the contribution limits. Then make all contributions to such an account deductible, and count all withdrawals from such an account as taxable income. Then tax that according to a graduated rate schedule. That should capture a goodly portion of consumption.
(I realize that this system wouldn't tax that portion of "consumption" financed via borrowing. Although consistency would imply treating such borrowing as taxable income as well, this seems both politically impossible and utterly impractical. I'd settle for eliminating interest deductions of all kinds.)
So, MI, you are suggesting we report our spending to the IRS rather than our income? (That's a real question, not a rhetorical one. I'm interested in what you have to say.)
It strikes me that such a system would lend itself to government intrusion into our lives much more than today. The technology already exists to capture essentially all of our non-cash transactions--and we could just get a bill. If you happened to have a tornado strike you house, huge tax bill. Sick kids and need to eat out a lot, raises your tax bill. Want to take that vacation of a lifetime? Get ready to pay a whopping tax. Or do you have a different take on this?
MI, you are suggesting we report our spending to the IRS rather than our income?
No, just contributions to, and withdrawals from, savings accounts specifically designated tax-deferred. AFAIK, such reporting is already done with IRAs & 401k accounts.
As for the system you suggest...I'm not sure how practical it would be. Unless we ban cash transactions, I could see this sort of sales tax generating massive compliance problems, even with technological transaction captures. The FairTax quoted a 30% rate for a tax base similar to the one you suggest. How many people would pay cash in exchange for a de facto 15% price knockoff? Issues of distributional justice aside, I'd like to see some mid-size state successfully implement this sort of system before endorsing it.
Note that my current support for some sort of consumption tax is prudential. It's not 'cuz I think a consumption tax is the ideal method for raising government revenue. Rather, it strikes me as an appropriate response to overconsumption on the one hand, and an abysmal savings rate on the other. If our net savings rate was more comparable to China's, I'd probably think differently. As I mentioned above, a healthy economy requires both savings and consumption.
MI: Your comments about consumption and savings make perfect sense from a classical perspective. Unfortunately, the classical relationship has been thrown out of whack in recent decades by the reckless expansion of money supply by the Fed and (most especially) the central banks of Japan and China. That's why you have been getting next to nothing in interest for your savings. It's now payback time for this incredibly foolish error.
There was a time, five to ten years ago, when I would have eagerly engaged in a debate over the optimum tax policy for the U.S. Unfortunately, I believe events are spinning out of control and we will be in crisis mode before too long. A change in tax policy will not be necessary to promote a shift in time preference from spending to saving.
Pyrrho - I agree that massive capital injections (from Asia or elsewhere) can tend to throw the savings/consumption balance out of whack. My 10:42 post - intended as a corrective to the "consumption bad, savings good" mentality that earlier posts seemed to hint at - neglected these considerations for simplicity's sake.
I agree that a reckoning is coming; my only hope is that it occurs gradually, so that everyone has time to adjust.
Post a Comment
By submitting these comments, I agree to the beliefnet.com terms of service, rules of conduct and privacy policy (the "agreements"). I understand and agree that any content I post is licensed to beliefnet.com and may be used by beliefnet.com in accordance with the agreements.